ADTRAN (ADTN)2024-05-10 17:37Revenue and Profitability - The company reported a significant fluctuation in revenue, which may continue to impact operating results in future periods[9]. - Total revenue for the three months ended March 31, 2024, was 323.912 million for the same period in 2023[24]. - The operating loss for the three months ended March 31, 2024, was (49.732) million loss reported in the same period last year[24]. - Net loss attributable to ADTRAN Holdings, Inc. for the three months ended March 31, 2024, was (40.083) million for the same period in 2023, reflecting a substantial increase in losses[24]. - Gross profit for the three months ended March 31, 2024, was 87.808 million in the same period last year, indicating a decline of 17.7%[24]. - The company expects gross margins to vary over time, with potential impacts on product and service profitability[9]. Financial Condition - The company has incurred substantial indebtedness due to the Business Combination and DPLTA, which could adversely affect financial condition and results of operations[12]. - Cash and cash equivalents increased to 87.167 million as of December 31, 2023[22]. - Total assets decreased to 1.683 billion as of December 31, 2023, representing a decline of 21.1%[22]. - Total liabilities decreased to 636.934 million as of December 31, 2023, a reduction of 2.6%[22]. - As of March 31, 2024, the total equity of ADTRAN Holdings, Inc. is 593,822 thousand as of December 31, 2023[29]. Impairment and Charges - The company recognized impairment charges related to goodwill and intangible assets, with the possibility of future charges[9]. - The company recognized a goodwill impairment of 292,583 thousand in Q1 2024, which is a new development compared to no impairment reported in Q1 2023[35]. - The company incurred total charges of 4.0 million related to inventory write-downs[70]. Research and Development - The company engages in research and development to innovate and improve products, but may miss market opportunities compared to larger competitors[13]. - Research and development expenses for the three months ended March 31, 2024, were 70.143 million in the same period last year, a decrease of 14.1%[24]. Market and Economic Conditions - The lengthy sales and approval process for new products has historically resulted in revenue fluctuations, which may persist[9]. - The company is exposed to risks related to credit from customers and distributors, potentially affecting accounts receivable collection[9]. - The company faces ongoing inflationary pressures that could negatively impact revenues and profitability[9]. - ADTRAN experienced revenue declines in the year ended December 31, 2023, and during the three months ended March 31, 2024, due to uncertain macroeconomic conditions[39]. Business Efficiency and Cost Management - The Company has suspended dividend payments and is implementing a business efficiency program, including planned reductions in operating expenses and a site consolidation plan[40]. - The company expects future costs related to the Business Efficiency Program to range between 35.8 million[117]. - Total restructuring expenses for the three months ended March 31, 2024, amounted to 2.4 million for the same period in 2023[121]. Liquidity and Borrowing - The company has access to 22.7 million based on debt covenant compliance metrics[39]. - The company believes its cash and cash equivalents, investments, and access to cash under the Wells Fargo credit facility will be adequate to meet its business operating requirements for at least the next twelve months[40]. - The Company entered into a new receivables purchase agreement with a borrowing capacity of up to 12.6 million as of March 31, 2024[58]. Stock and Shareholder Information - The weighted average shares outstanding for the three months ended March 31, 2024, were 78.814 million, compared to 78.358 million for the same period in 2023[24]. - The loss per share attributable to ADTRAN Holdings, Inc. was (0.51) for the same period in 2023[104]. - The company had a total of 79,116 common shares outstanding as of March 31, 2024, an increase from 78,970 shares as of December 31, 2023[29]. Tax and Deferred Assets - The effective tax rate for the three months ended March 31, 2024, was a benefit of 5.5%, down from a benefit of 21.9% for the same period in 2023[59]. - The Company had net deferred tax assets totaling 86.5 million against those assets[59]. Foreign Currency and Derivatives - The company has 45 forward rate contracts outstanding as of March 31, 2024, to hedge foreign currency exposure[79]. - The fair value of derivative instruments recorded in the balance sheet was 4.8 million at the end of 2023[81]. - The company recorded a gain of (69,000) in the same period of 2023[82].